The most expensive method of adjusting for total project risk in the evaluation of capital budgeting projects is the _____.
A) sensitivity analysis method
B) simulation approach
C) net present value/payback method
D) risk-adjusted discount rate approach

Question

Quizplus · Accepted Answer

The simulation approach, often involving complex computer models to simulate a wide range of possible outcomes, is typically the most expensive method for adjusting for total project risk in capital budgeting evaluations due to its need for extensive data, computational resources, and time.

The Most Expensive Method of Adjusting for Total Project Risk